Filed: Mar. 05, 2002
Latest Update: Feb. 21, 2020
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 01-10491 _ In The Matter Of: FIRST CITY BANCORPORATION OF TEXAS INC., Debtor. JERRY KRIM; HAROLD L. HARRIS, Individually and as Trustee of Mazel Inc. Profit Sharing Plan; GROUP OF SECURITIES LITIGATION CLAIMANTS; HARVEY GREENFIELD, Appellants, versus FIRST CITY BANCORPORATION OF TEXAS INC., Appellee. _ Appeal from the United States District Court for the Northern District of Texas March 5, 2002 Before JOLLY, SMITH, and BENAVIDES,
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 01-10491 _ In The Matter Of: FIRST CITY BANCORPORATION OF TEXAS INC., Debtor. JERRY KRIM; HAROLD L. HARRIS, Individually and as Trustee of Mazel Inc. Profit Sharing Plan; GROUP OF SECURITIES LITIGATION CLAIMANTS; HARVEY GREENFIELD, Appellants, versus FIRST CITY BANCORPORATION OF TEXAS INC., Appellee. _ Appeal from the United States District Court for the Northern District of Texas March 5, 2002 Before JOLLY, SMITH, and BENAVIDES, C..
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 01-10491
_____________________
In The Matter Of: FIRST CITY BANCORPORATION OF TEXAS INC.,
Debtor.
JERRY KRIM; HAROLD L. HARRIS, Individually and as Trustee of Mazel
Inc. Profit Sharing Plan; GROUP OF SECURITIES LITIGATION CLAIMANTS;
HARVEY GREENFIELD,
Appellants,
versus
FIRST CITY BANCORPORATION OF TEXAS INC.,
Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
March 5, 2002
Before JOLLY, SMITH, and BENAVIDES, Circuit Judges.
PER CURIAM:
After listening to the oral arguments of the parties and
closely examining the record, we conclude that the sanctioned
lawyer in this case, Harvey Greenfield, was appropriately
sanctioned by the bankruptcy court. His attitude and remarks
toward opposing attorneys, opposing parties, and the bankruptcy
court were -- to understate his conduct -- obnoxious. Although
incivility in and of itself is call for concern, what is most
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disconcerting here is the rationale Greenfield gives for his
behavior. Greenfield asserts that his deplorable and wholly
unprofessional conduct helps him recover more money for his
clients. Unremorsefully and brazenly, Greenfield contends that his
egregious behavior serves him well in settlement negotiations and
is therefore appropriate. Because we find that the bankruptcy
court did not abuse its discretion when it issued sanctions in this
case, we affirm the district court’s judgment affirming the
bankruptcy court’s sanction order.
I
In 1990, Jerry Krim, Harold L. Harris, and several other
claimants filed a class action lawsuit against FirstCity
Bancorporation of Texas Inc. (“FirstCity”), its officers and
directors, and Donaldson, Lufkin & Jenrette Securities Corporation.
Greenfield represented the plaintiff class. In 1992, the parties
reached a $20 million dollar settlement. The settlement, however,
was set aside when federal regulators seized control of FirstCity’s
assets. FirstCity then filed a bankruptcy petition under Chapter
11. Greenfield pursued the claims of the plaintiff class in
bankruptcy, reaching a settlement agreement with FirstCity for over
$10 million in cash and stock. FirstCity incorporated this
settlement agreement into its Joint Plan for Reorganization.
FirstCity then filed a motion to sanction Greenfield, based in
part on his conduct during a July 13, 1995 deposition when
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Greenfield deposed A. Robert Abboud, a director of FirstCity and a
claimant in bankruptcy for indemnification of legal expenses.
Abboud was represented by Hyman Schaffer.
One day before the deposition, the bankruptcy judge conducted
a telephone conference with Schaffer, Greenfield, and Kenneth
Carroll (counsel for FirstCity Liquidating Trust). During this
hearing, the bankruptcy court directed the parties to restrict the
deposition to issues pertinent to Abboud’s indemnification claim.
The bankruptcy court also denied Greenfield’s motion for leave to
refer to a confidential report compiled by Baker & Botts for the
audit committee at FirstCity. Finally, the bankruptcy court urged
Greenfield not to engage in personal attacks during the deposition.
At the deposition, in apparent defiance of the bankruptcy
court’s order, Greenfield used the Baker & Botts report in the
questioning of Abboud. Also during the deposition, the parties
continued to disagree about the proper scope of the deposition
inquiry. So, they again went to bankruptcy court to clarify the
exact issues to be covered at the deposition. At this second
telephone hearing, the bankruptcy court once more cautioned
Greenfield to refrain from personal attacks.
Despite these multiple warnings, during the deposition
Greenfield stated that “I am going to have Mr. Abboud indicted.”
He also accused Schaffer of having been fired from Sullivan and
Cromwell.
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Greenfield’s obnoxious behavior, however, was not limited to
Abboud’s deposition. Some of the other statements made by
Greenfield during the bankruptcy proceeding -- noted by both the
district court and the bankruptcy court -- are the following:
! He characterized other attorneys, including an Assistant
United States Attorney, as (1) a “stooge”; (2) a “puppet”; (3)
a “weak pussyfooting ‘deadhead’” who “had been ‘dead’ mentally
for ten years”; (4) “various incompetents”; (5)“inept”; (6)
“clunks”; (7) “falling all over themselves, and wasting
endless hours”; (8) “a bunch of starving slobs”; and (6) an
“underling who graduated from a 29th-tier law school.”
! He called the chairman of FirstCity a “hayseed” and a “washed-
up has been,” and he also called other FirstCity directors
“scoundrels.”
! He referred to one law firm, Carrington, Coleman, Sloman &
Blumenthal, L.L.P. as “stooges” of another law firm, Vinson &
Elkins, L.L.P.
! He referred to the work of other attorneys as “garbage” that
demonstrated “legal incompetence” while involving “ludicrous
additional time and expense.”
! He asserted that Vinson & Elkins was using FirstCity as a
“private piggybank.”
! He described an executive compensation plan approved by the
bankruptcy court as a “bribe.”
The bankruptcy court found that Greenfield’s “egregious,
obnoxious, and insulting behavior ... constituted an unwarranted
imposition upon and an affront to [the bankruptcy court] and the
parties and practitioners who have appeared in this bankruptcy that
should not have to be endured in the future.” Accordingly, the
bankruptcy court imposed a monetary sanction of $22,500 and barred
Greenfield from practicing in the bankruptcy courts of the Northern
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District of Texas unless he first obtained written permission from
the court.
Greenfield appealed the sanction order to the district court.
Meanwhile, in an unrelated appeal that involved sanctions against
Greenfield for not conducting a reasonable inquiry into the facts
before filing a pleading, we reversed the sanctions. Krim v.
BancTexas Group, Inc., 99 F.3d 775 (5th Cir. 1996). In the light
of this decision, the district court remanded the case to the
bankruptcy court for reconsideration.
On remand, the bankruptcy court removed the sanction that
barred Greenfield from practicing in the Northern District’s
bankruptcy courts but maintained the monetary penalty. In
addition, the court increased the penalty by $2,500 “in light of
the other findings and conclusions and because Mr. Greenfield filed
a motion seeking to have this Court lift all sanctions against him
... and therefore caused counsel for FirstCity Liquidating Trust,
A. Robert Abboud, and Mr. Schaffer to devote time in appearing and
responding to that motion....”
Greenfield appealed to the district court, which affirmed.
Greenfield now appeals the district court’s decision.
II
We review the bankruptcy court's findings of fact under the
clearly erroneous standard and decide issues of law de novo.
Henderson v. Belknap (In re Henderson), 18 F.3d 1305, 1307 (5th
5
Cir. 1994), cert. denied, 513 U.S. 1014 (1994). The imposition of
sanctions is discretionary -- thus, we review the exercise of this
power for abuse of discretion. Matter of Terrebonne Fuel and Lube,
Inc.,
108 F.3d 609, 613 (5th Cir. 1997). “A court abuses its
discretion when its ruling is based on an erroneous view of the law
or on a clearly erroneous assessment of the evidence.” Chavez v.
M/V Medina Star,
47 F.3d 153, 156 (5th Cir. 1995). A court,
however, should exercise restraint when considering using its
inherent power to impose sanctions.
Id.
In the instant case, the bankruptcy court assessed sanctions
pursuant to (1) Rule 9011 of the Federal Bankruptcy Rules of
Procedure and (2) its inherent authority to police practitioners
before it.
Greenfield does not dispute the factual basis of the
bankruptcy court’s sanction order. He thus concedes that he made
the myriad rude and insulting comments outlined above. Greenfield
defends his comments in two ways. First, he argues that the
statements he made were, for the most part, correct. We find this
argument utterly meritless. Greenfield was never engaged in
stating plain facts -- he was engaged in hurling gratuitous and
hyperbolic insults. Second, Greenfield argues that the actions of
both the court and the opposing attorneys caused his abusive
conduct. Obviously, any error on the part of the court or motive
on the part of opposing attorneys in filing the sanction motion did
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not give Greenfield carte blanche to launch personal attacks and to
defy the court’s directive to cease his wholly unprofessional
conduct.
The only cognizable argument Greenfield makes is that the
sanction imposed was unduly harsh. Sanctions must be chosen to
employ “the least possible power to the end proposed.” Spallone v.
United States, 493 U.S. 265, 280 (1990)(quoting Anderson v. Dunn,
6 Wheat. 204, 231 (1821)). In other words, the sanctioning court
must use the least restrictive sanction necessary to deter the
inappropriate behavior. Here, the bankruptcy court repeatedly
urged Greenfield not to engage in personal attacks. He did not
respond to either the oral or the written warnings of the
bankruptcy court. We therefore hold that the bankruptcy court did
not abuse its discretion by imposing a sanction of $25,000.
Accordingly, the district court judgment affirming the bankruptcy
court is
AFFIRMED.
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